The Problem with the new HAFA Regulations

The new HAFA Regulations on the surface seems like a good thing. But there are several pieces of the regulation that will end up hindering the short sale process. Here are a few pitfalls that will end up creating issues for homeowners who end up going the short sale route through the HAFA program.

Market Value is determined prior to marketing the property. Many homes will be coming on the market overpriced. Overpriced homes for sale sit on the market and get stale. Really when have we seen appraisals come in where they really should? Plus, in a declining market you should be pricing ahead of the market not at market.

For the second lien holder to take advantage of the monies guaranteed from the HAFA regulations they must release the homeowner from future obligations. Right now most first lien holders are releasing the home sellers anyways. Second lien holders are starting to clamp down. They are under no obligation to to release the home seller from future defeciency judgements, most are getting there $3,000 anyways and retaining the right for the defeciency.

This is the biggy. Home sellers may be (which means most likely) will be required to pay the mortgage payments up to 31% of their gross income to the bank while they are in the short sale process.

Too many little things will get in the way of a program that was supposed to help homeowners in a financially distressed situation.

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